Quick solution to crisis needed to save economy

Unless the Philippines will come up with quick and credible solution to the current political battle, the country's economy is expected to crash down further.

Economist Cayetano Paderanga warned that even without the political crisis, the country's economy this year was already seen to move slower. Now, that another political intervention has taken the spotlight, the economy's movement has been pulled further to the bottom.

Paderanga was in Cebu recently to conduct a Mid-Year Economic Briefing dubbed "Philippine Economy a Year After Elections," said Filipinos should come united in solving this political crisis quickly so that the economy will be saved.

He said whatever resolution would cut off the political crisis is highly needed.

If the Philippines will be able to settle a quick and credible resolution of the political crisis, that means that majority of Filipinos will accept of whatever changes will be introduced, the Gross Domestic Product (GDP) growth is expected to strengthen within 4.5 percent to five percent in the next three months.

But if the fight will linger on, GDP will suffer and expected to post within 3 percent to 3.5 percent growth.

He said there is a need for Filipinos to be united these days, in order to save the crumbling economy.

"We question ourselves too much. We do not allow the ship to go where it is going. We are not thinking as one, that's why we cannot move on," Paderanga said.

President Arroyo's plan to introduce charter change and push parliamentary and federal system of government should be acceptable to majority of the Filipinos, otherwise, the political war will not stop, thereby pushing down the economy.

However, he said the Philippines' economic bottom line is not too deep, as the country's savior who are the Overseas Filipino Workers (OFWs) are increasing.

The remittances of the OFWs have been the savior of the Philippines' fragile economy.

"As long as there are remittances from our OFWs, buhi pa ta," said Paderanga a former member of the Bangko Sentral Ng Pilipinas (BSP) monetary board.

Aside from the internal crisis brought about by the political trouble in the country, the business environment has already been shaken, he said increase in consumer prices driven by rising oil prices due to demand from countries such as China and India, is just one of the problems brought about by external factors.

Because of high market liquidity, domestic interest rates are declining despite increasing interest rates abroad.

The current political controversies have weakened the peso further, he added.

He reiterated that this political battle will have a significant effect on the export sector in the country is this will go on in the few months.

Already, before this controversy broke out, the export sector has suffered a slower growth in the first quarter of this year due to lower global demand for major export products like electronics.

The Midyear economic briefing in Cebu organized by CIBI, and WealthBank was attended by key players in the business community in Cebu.